Cloud Curiosities: A Safer AI Dividend

Now, Nebius. Formerly Yandex, you understand – a name that once meant something to people who knew a lot about Russian search engines, which, let’s be honest, isn’t most of us. It had a bit of a shuffle, a relocation to the Netherlands, and emerged rebranded, like a slightly bewildered caterpillar transforming into a… well, a cloud platform. It’s all rather fascinating, really. The stock, after a bit of a hiatus, has been doing a bit of a dance, leaping upwards with an enthusiasm that suggests either genuine innovation or, possibly, a touch of speculative fever. Revenue surged, naturally, by figures that would make a lesser company blush – 462% last year, another 437% recently. Impressive, certainly, but it does raise the question of sustainability. A rocket can only burn so brightly, you see.

It’s secured deals with the likes of Microsoft and Meta, which is, admittedly, a good sign. Everyone likes being associated with the big boys. But Nebius operates a rather limited number of data centers – one actually owned, the rest leased. Expanding that footprint requires, shall we say, a significant outlay of capital. Analysts foresee losses, and when analysts foresee losses, one tends to listen. It’s a bit like building a magnificent castle on a foundation of hope and borrowed money. It might work, but one wouldn’t necessarily want to be holding the mortgage.

Which brings us, rather neatly, to DigitalOcean. Now, DigitalOcean isn’t setting the world on fire with quite the same explosive growth as Nebius. It’s more of a steady, reliable simmer. And in the world of investing, sometimes a simmer is precisely what you want. It’s a cloud infrastructure company, yes, like Amazon Web Services and Microsoft Azure, but with a rather clever twist. It caters to the smaller fry – the small businesses, the individual developers – offering affordable “droplets” of computing power. It’s a bit like offering a perfectly serviceable bicycle instead of a Formula One racing car. Most people don’t need a Formula One car, you see.

When DigitalOcean went public, the naysayers predicted it would be swallowed whole by the giants. But it carved out a niche, attracted a loyal customer base, and now operates a respectable 15 data centers worldwide. Revenue has been growing at a solid 22% annually, and, crucially, it’s actually making a profit. A genuine, honest-to-goodness profit. That, my friends, is a rare and beautiful thing. It acquired Paperspace in 2023, adding some AI-oriented GPUs to the mix. A sensible addition, really, like putting a decent suspension on that bicycle.

DigitalOcean offers flat monthly pricing, competitive performance, and a clean user interface. It’s also helping smaller businesses develop their own AI applications without being entirely dependent on the behemoths. Analysts predict revenue growth of 15% this year, with a steady increase in adjusted earnings per share. It’s not going to make anyone an overnight millionaire, but it offers a degree of stability and predictability that is rather appealing. The company’s market capitalization of $5.4 billion seems reasonable, valued at 5 times this year’s sales and 29 times forward-adjusted earnings. It’s not cheap, but it’s not outlandish, either.

So, if you’re looking for a more stable, less speculative play in the AI infrastructure market, DigitalOcean might just be worth a closer look. It’s not the flashiest option, perhaps, but sometimes the quiet, dependable performers are the ones that deliver the best long-term returns. Like a well-maintained bicycle, it may not be glamorous, but it will get you where you need to go. And, crucially, it won’t leave you stranded in the rain.

2026-01-28 01:12

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